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[2015] ZAGPPHC 298
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Christo Burger Dienslewering CC t/a MC Burger Shopfitters v Nortje and Others (58409/14) [2015] ZAGPPHC 298 (8 May 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case Number:
58409/14
Date: 8 May 2015
Not reportable
Not of interest to
other judges
In the matter
between:
CHRISTO BURGER
DIENSLEWERING CC t/a
MC
..................................................................
APPLICANT
BURGER SHOPFITTERS
and
THEUNIS DANIEL
NORTJE
...............................................................................................
1
st
RESPONDENT
CARL BENJAMIN
VISAGE
...............................................................................................
2
nd
RESPONDENT
TORNOLOG (PTY)
LTD
.....................................................................................................
3
rd
RESPONDENT
Coram:
HUGHES
J
JUDGMENT
Heard on: 11
February 2015
Delivered on: 8 May
2015
HUGHES J
[1]
On 2 October 2014 an order was made by this court that the relief
sought in terms of a restraint of trade against the respondents
was
to be postponed
sine
die
the
matter having become opposed. A cost order was made against the first
respondent on an unopposed basis, however, on an attorney
and client
scale. These costs were to be paid jointly and severally the one
paying the other to be absolved, with any cost order
granted against
the second and third respondent. That was the order.
[2] This matter came
before me on the opposed motion roll.
[3] The applicant as
is cited in these papers submits that it commenced business in 1998.
The principal service which it provided
was the installation,
maintenance of store-front and operating areas of huge franchises and
businesses. Essentially the applicant
is in the business of shop
fitting. One of the applicant’s clients’ which it
services is Kentucky Fried Chicken (“KFC”).
[4] According to the
applicant, the first and second respondents were employed as an
Artisan and Assisted Manager, respectively.
Their duties entailed
shop fitting and related activities in the greater Gauteng, Limpopo,
North West and Mpumalanga Provinces.
[5] In the answering
affidavit of the second respondent he denies that he and the first
respondent were employed by the applicant
as is cited in these
papers. He avers that he and the first respondent were employed by an
entity known as CHRISTO BURGER DIENSLEWERING
BK with registration
number 98/72322/23 (“CBD”).
[6] The first
respondent concluded his letter of appointment with CBD on 4 February
2013 as an Artisan. While the second respondent
on 6 April 2009
concluded his letter of appointment with CBD as an Assistant Manager.
These appointment letters are annexed to
the applicant’s
founding affidavit as annexures “MCB3” and “MCB4”
[7] On 16 May 2014
the first respondent left the employ of the applicant seeking greener
pastures and likewise did the second respondent
on 31 March 2014.
[8] The letters of
appointment concluded by the first and second respondents provided
for a contractual restraint of trade. This
appears at Clause 9 of the
appointment letter and the relevant extract appears below:
“
2.9
Restraint
of trade: It is the company policy that you will not, on leaving the
Company have any contact with any of our clients
for a period of 2
(two) years. You will also be expected not to reveal any secrets of
the trade or how the Company operates or
any financial details.
2.9.1 The
employee undertakes not to be engaged in any other business, in
competition with the Employer’s business, be it
indirect, or as
a shareholder, partner, member of a Close Corporation, director of a
company or in any other capacity within 1
(one) year of termination
of this contract.
2.9.2 The
employee acknowledges and agrees that the aforesaid restraint is
fair, reasonable and necessary for the protection of
the employer’s
trade name and the goodwill attached thereto.
2.9.3 The
employee acknowledges that the employer shall be entitled to recover
damages and associated recovery costs from the employee
in respect of
any breach of the aforesaid restraint of trade"
[9]
In the answering affidavit of the second respondent he states that he
and the first respondent were not employed by the applicant
as cited
in this application. I propose to deal with this issue first as it
has an impact on the
locus
standi
of
the applicant to exercise the restraint of trade which appears in the
letters of appointment of the first and second respondents.
[10] From the
letters of appointment, annexures MCB3 and MCB4, the first and second
respondents signed with the entity CBD.
[11] Mr De Bruyn,
representing the respondents, argued that CHRISTO BURGER
DIENSLEWERING CC t/a MC BURGER SHOPFITTERS registration
number
1998/072322/23 is not whom the respondents contracted with and that
the first and second respondent, as is evident from
the letters of
appointment, contracted with CHRISTO BURGER DIENSLEWERING BK with
registration number 98/072322/23 (“CBD”).
He further
argued that CBD and MC BURGER SHOPFITTERS (“MCBS”) are
two separate entities. They were registered as such
with separate
industrial, service or business classifications, which differed.
[12]
Mr De Bruyn pointed out that CBD as an entity having the following
registration number 1998/072322/23, are
“
Scaffolding
Manufactures, largest scaffolding manufactures and suppliers in South
Africa”.
Their
standard industrial classification and activity registration is noted
as
“
versaffing
van handvaardigheids georienteerde dienste”.
This
appears at annexure “CBV4” which is attached to the
second respondent’s answering affidavit.
[13]
In addition, Mr De Bruyn referred to annexure “MCB2”
which is attached to the applicants founding affidavit, headed
the
CIPC company report, which records the industry of CBD as
“
Manufacturing”
with
no reference to CBD trading as MC BURGER SHOPFITTERS.
[14]
In contrast, MCBS as an entity has the registration number
1998/066614/23 and the business recorded for this entity was
“
shop
and office fitters”.
Mr
De Bruyn pointed this out on annexure “CBV3” attached to
the second respondents answering affidavit.
[15] There is also a
record of an entity with a similar name, M C B SHOPFITTERS
registration number 1998/066836/23. Now all the
entities referred to
thus far have Marthinus Christoffel Burger recorded as their sole
member, evident from annexure “CBV2”.
Marthinus
Christoffel Burger is the member who was duly authorised to depose to
the founding affidavit on behalf of the applicant
as cited in the
papers and he is duly authorised to represent CBD as per annexure
“MCB1” attached to the applicants
papers.
[16] The second
respondent contends that the restraint of trade that appears in their
contracts pertains to CBD and not the entity
that is the applicant in
this matter. Further, from annexure “CBV3” the entity
that they were employed by was never
CHRISTO BURGER DIENSLEWERING CC
t/a MC BURGER SHOPFITTERS.
[17]
The applicant addresses this issue in its replying affidavit and
states that the second respondent was employed by CBD as is
evident
from “MCB4” and that
“
The
applicant’s trade name was irrelevant for purposes of the
Second Respondent’s interview and subsequent appointment”.
Further
that indeed the deponent to the founding affidavit was a member of
MCBS with the registration number as listed above.
[18] Of interest is
that submitted by the applicant in its papers, which in a way
confirms who exactly the applicant is in this
matter:
“
The
Applicant is not relying on the business interests, clientéle
and trade secrets of MC Burger Shopfitters CC, with registration
number 1998/066614/23, but on the business interests, clientéle
and trade secrets of Christo Burger Dienslewering CC, trading
as M C
Burger Shopfitters, with registration number 1998/072322/23, It is
separate entity, and the Applicant in this matter. It
is also the
entity which employed the Second Respondent on the 6
th
April 2009.
”
[19]
It was further argued by the applicant that the standard industrial
classification and activity registration
“
versaffing
van handvaardigheids georienteerde dienste”
which
appears at annexure “CBV4”, with reference to CBD,
encompasses the activity for which the second and first respondent
were employed. Thus the restraint of trade is applicable in the
circumstances.
[20] Section 2 of
Close Corporation Act 69 of 1984 reads as follows:
“
2
Formation and juristic personality of close corporation
(1) At any time
before section 13 of the Companies Act comes into operation, any one
or more persons, not exceeding ten, who qualify
for membership of a
close corporation in terms of this Act, may form a close corporation
and secure its incorporation by complying
with the requirements of
this Act in respect of the registration of its founding statement
referred to in section 12.
[21]
[Sub-s. (1) substituted by
s.
224 (2)
of
Act
71 of 2008
.]
[22]
(2) A corporation
formed in accordance with the provisions of this Act is on
registration in terms of those provisions a juristic
person and
continues, subject to the provisions of this Act, to exist as a
juristic person notwithstanding changes in its membership,
or its
conversion to a company in terms of Schedule 2 of the Companies Act,
until it is deregistered or dissolved-
(a)
i
n
terms of this Act; or
(b)
in
terms of the Companies Act, in the case of a juristic person that has
been converted to a company.
[23]
[Sub-s. (2) substituted by
s.
224 (2)
of
Act
71 of 2008
.]
(3) Subject to the
provisions of this Act, the members of a corporation shall not merely
by reason of their membership be liable
for the liabilities or
obligations of the corporation.
(4) A corporation
shall have the capacity and powers of a natural person of full
capacity in so far as a juristic person is capable
of having such
capacity or of exercising such powers.”
[24] It is trite,
having regard to the above, that a close corporation has its own
juristic personality, separate from its members
and can sue and be
sued. The version advanced by the applicant is to the effect that CBD
the entity which concluded the restraint
of trade with the first and
second respondent trades as CHRISTO BURGER DIENSLEWERING CC t/a MC
BURGER SHOPFITTERS.
[25] This submission
is persisted even though no documentation is produced either in the
form of a CIPRO report or at the least
a letterhead indicating
CHRISTO BURGER DIENSLEWERING CC t/a MC BURGER SHOPFITTERS. In fact as
stated above the opposite is indicted.
In my view it illustrates that
CBD and MCBS were individual close corporations and were independent
entities with their own individual
registration numbers, descriptions
of the service and/or business provided.
[26] The ‘trading
as’ entity has the exact same registration number and exact
same prescription of service or business
as CBD. The latter’s
business or services to my mind does not fall within the ambit
wherein the respondents were employed
and restrained from embarking
upon.
[27] In fact the
service and business description of MCBS as an registered entity was
the service that the first and second respondent
were providing the
applicant, and it would appear that the entity CBD, to whom the first
and second respondents were contracted
cannot restrained them and now
seeks to do so via the backdoor because of the main member of all the
entities being Marthinus Christoffel
Burger.
[28] Further, on an
examination of the contract which encapsulates the restraint of trade
the following is noted:
(a) the document is
a letter of appointment;
(b)
the company who appointed the first and second respondent’s is
recorded as
Christo
Burger Dienslewerings (CC) Bk:
(c)
the
letter of appointment is on the letterhead of
Christo
Burger Dienslewerings BK 98/72322/23;
(d)
as part of the restraint at paragraph 2.9.2 the first and second
respondent’s acknowledged that the restraint was
“
fair,
reasonable and necessary for the protection of the employer’s
trade name and goodwill”.
[29] I cannot agree
with the applicant that the entity which the first and second
respondent’s contracted their service of
employment, who may
exercise the restraint, is the same entity cited as the applicant in
these proceedings. I am not convinced
that the entity which the
applicant cites, as an applicant, was the entity that the respondents
contracted with. In my view the
first and second respondents
contracted with CBD, evident from their letter of appointment.
[30]
On the facts before me at no stage was there an application to change
the name of CBD close corporation to CHRISTO BURGER DIENSLEWERING
CC
t/a MC BURGER SHOPFITTERS. Therefore first and second respondent’s
acknowledgment of the restraint of it being
“
fair,
reasonable and necessary for the protection of the employer’s
trade name and goodwill”
pertains
to their employer being CBD (Christo Burger Dienslewerings (CC) Bk)
as appears on their letter of appointment.
[31]
In
Christie’s
The Law of Contract in South Africa, 6
th
edition
at
page 269 the doctrine of privity of contract is explain:
“
The
basic idea of contract being that people must be bound by the
contracts they make with each other it would obviously be ridiculous
if total strangers could sue or be sued on contracts with which they
were in no way connected. The doctrine which prevents this
ridiculous
situation arising is usually known as the doctrine of privity of
contract: parties who are not privy to a contract cannot
sue or be
sued on it. ”
[32] In essences
even though the main member of all the entities is one and the same
person the entities are district with their
own independent jurist
personality and as such one cannot substitute one entity for another
when that entity was not even a party
to the contract.
[33] From the above
I conclude that the intention of the parties when they contracted
within the bounds of the restraint of trade
was to protect the
interest of Christo Burger Dienslewerings (CC) Bk and not CHRISTO
BURGER DIENSLEWERING CC t/a MC BURGER SHOPFITTERS.
[34] The problem
that the applicant encounters is that the entity which the first and
second respondents contracted their services
to was not and is not
registered as a shop fitter establishment. Thus, the interest, the
parties contracted to protect, in terms
of trade secrets,
confidential information and clients does not pertain to the entity
that the first and second respondents contracted
with. In addition
the applicant cited in these proceedings was not a party to the
aforesaid contract.
[35]
In the circumstances the applicant as cited in these proceedings, not
being a party to the contract containing the restraint
of trade which
is enforceable against the first and second respondent, cannot have
locus standi
to
sue the first and second respondent on the restraint of trade. In
this regard I refer to the
locus
classicus
on
the
locus standi
ferreira
v
levin no and others;
VRYENHOEK AND
OTHERS v POWELL NO AND OTHERS1996 (1) SA 984 (CC) at paragraphs [162]
to [164].
[36]
Having concluded that the applicant has no
locus
standi
I
do not deem it necessary to deal with the restraint of trade clause
as the applicant cannot exercise the restraint against the
respondents.
[37] In the result
the application is dismissed with costs.
W. Hughes
Judge of the High
Court
Attorney for the
Applicant:
MACINTOSH CROSS
& FARQUHARSON
834 Pretoruis Street
Arcadia
PRETORIA
Tel: 012 342 4855
Ref: LW
DIXON/EN/G144/14
Counsel for the
2
nd
and 3
rd
Respondents:
DE BRUYNS ATTORNEYS
654 Redelinghuys
Street
Hercules
PRETORIA
Tel: 012 377 2109
Ref: Mr de
BruynA/IS6/0001